Strategy and Performance of Microfinance Institution: Evidence from Nigeria

International Journal of Research and Scientific Innovation (IJRSI) | Volume VI, Issue VI, June 2019 | ISSN 2321–2705

Strategy and Performance of Microfinance Institution: Evidence from Nigeria

Jamilu Hussaini¹, Nasiru Liman Zuru²

¹Division of General Studies, Kebbi State University of Science and Technology, Aleiro Kebbi State, Nigeria.
²Department of Business Administration, Faculty of Management Sciences, UsmanuDanfodiyo University Sokoto, Sokoto State, Nigeria.

ABSTRACT:- Despites the strategic management literature emphaseson the influence of low cost strategy on the organisational performance, the review of literature reveals that theoretical and empirical contributions of low coststrategy to the Microfinance Institutions (MFIs) remained limited, particularly in the Nigeria context. The limited theoretical and empirical contributions in this field of study have resulted not only in minimal knowledge about the low cost strategy by MFIs but also the lack of information concerning factors that could influence the performance of these important financial institutions. Given the limited research as well as information in this field of study, this study attempts to examine MFIs in Nigeria from the strategic management perspectives. More specifically, this study investigates the relationship between low cost strategy and performance of MFIs in Nigeria. The study was based on a sample survey consisting of 121MFIs in Nigeria. The data for the study was collected by using structural questionnaire. Based on the analyses of the data using Statistical Package for Social Science (SPSS) and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results of the study indicates significant positive relationships between low cost strategy and the financial and social performance of MFIs. The result shows that the low cost strategy does not only influence the financial performance of MFIs but also social performance as well. The implication is that, managers that focus on the practice oflow cost strategy in their microfinance institution will not only able to increase their financial performance but social performance as well.

Keywords: Strategy, Performance, Microfinance Institutions, Nigeria

I. INTRODUCTION

The interest and adoption of strategic management practices among organisation has witnessed growth over the years. Since it was first introduced, the concept of business strategy has gain acceptance not only as an important component of strategic management process, but also as good business practice among business organisations. The emphasis on business strategy resulted from evidence that suggests its adoption can help organisations to not only improve their performance but sustain their success as well.

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